Goodbye to unlimited prosperity

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NEW YORK (Fortune) -- The American dream is in peril, and Jack Cafferty has something to say about it. In his new book, Now or Never: Getting Down to the Business of Saving Our Dream, CNN's irascible commentator takes on the economy, foreign policy, education, health care, immigration, energy, the Bush legacy and Obama's opportunity--nothing less than the future of the country. He even manages to tie in his life story, complete with a hardscrabble youth, alcoholism, and redemption in marriage and fatherhood. Fortune spoke with Cafferty about what he sees is wrong with the country--and what needs to be done about it. Below are excerpts from that discussion:

The title of your book says the American dream is in peril. Why is that?

Well, take a look around. Foreclosures, unemployment, debts and deficit, companies going out of business, bailouts. The evidence is pretty clear.

Who's to blame?

You can't assign blame to a person for the kind of cumulative gathering of storm clouds that we're dealing with right now, but mostly policies of not living within our means and in the case of Wall Street and the banks, a lack of proper supervision for these mortgage-backed securities and some of these other investment instruments that have led to the kind of horrific situation we've got in the financial sector. We've been running deficits and debt for years. George Bush doubled the national debt in the eight years he was in office. He accumulated more debt on his watch than all the previous U.S. Presidents before him combined.

What lessons can corporate America draw from the outrage at Wall Street?

Well, it doesn't seem to me like [Corporate America] is too concerned about it. The problem, I think, is the deregulation that actually happened. The public elects the morons that are supposed to watch over these things. People in Connecticut sent Chris Dodd to Washington. Chris Dodd collected the second-biggest amount of money from AIG of anybody in Washington [for the 2008 election cycle].

Was there a quid pro quo? I don't think so, but there's an unhealthy and unwholesome relationship between corporate America and the federal government. It's the thing that Dwight Eisenhower warned about in the '50s: watch out for the military industrial complex. Well, they came along and they finally got strong enough and they bit everybody right in the ass.

How's Obama & Co. doing?

I don't know. I'd like to think they're doing well, but I don't think any of us will know the answer to that question for a while. What he is doing is he's leading, unlike the predecessor, who walked around muttering incoherent sentences a good part of the time. He's working, he's got a lot of balls in the air, he's got a lot of ideas on what needs to be done. I hope he's right, but I don't think anybody knows the answer to the question yet.

Do Obama & Co. have their priorities right?

I think they do. For the moment, the economy is Job One, and I think it seems like every day that's kind of where most of his focus is, and he sort of put some of the other things on the back burner, but not entirely, and he's not a one-issue guy. Bush was kind of a myopic fellow, I think, by comparison. He would focus on one or two things at a time. It seems that Obama can multi-task and kind of address several things at a time. But most of the attention is going to the economy, and that's as it should be.

Will increased regulation prevent the next financial crisis?

If I knew the answer to that, I'd be charging jillions of dollars as a consultant to the business community. But I think certainly, the situation we're dealing with cries out for some better oversight, and I think if we can put some of that in place and gear the banking industry back to being the banking industry instead of the banking/investment/Wall Street/whatever, that might be a good thing. And if this prevents the next financial crisis, something else will cause [a crisis]. It'll be $200 oil, it'll be Iran dropping a nuclear weapon. There'll always be somebody coming along to cause the next crisis.

How long will America take to get out of this trouble?

I don't know that we're ever going to get completely out of this one. We are going to have to accept a decline in our standard of living in this country. I don't know that we'll ever return to the days of unlimited prosperity that we've seen in the past. I think the old idea that our children's generation is going to have it better than we did, I think that's an idea that's no longer necessarily valid. So I don't know that this is ever going to be completely over.

The other thing that concerns me is all this money that's being printed in Washington and being thrown at these problems. It's just paper. It's not based on anything, it's all borrowed money. So we're adding to the debt, which will have to be addressed [at] some point.

What role do you think Republicans can play in fixing these problems?

I think the party has got to try to be a little more cooperative. Washington politics is a nasty game, and the guys that are out are always complaining about the guys that are in. But I think we've got something that qualifies as a national emergency on our hands here with the economy, and when that kind of thing happens, you'd like to think that the parties could maybe pull together a little more.

And it might be helpful if the Republicans would try to be a little more cooperative and contribute a little more to the solution rather than just sitting on the sidelines and carping about what they see as the shortcomings of the administration. I'm not sure that's helpful.

What are you hearing from Main Street?

Some desperation, lots of anger, frustration, but on the other hand, a lot of hope. People are very hopeful that this new President we have has got the Midas touch when it comes to being able to address and fix some of this stuff. He's extraordinarily popular. But there's a lot of frustration, a lot of pain. I hear from people in the Rust Belt, who say the local economies in parts of the country are just shot. There's nothing there. Everything's shut down, there's no jobs, there's no nothing.

I just hope that maybe, if nothing else, this economic tsunami will bring home to folks the importance of getting involved. Obama talked about it in the campaign, you got to be involved, you got to participate, that whole cliché that freedom ain't free. And if it produces that, then we're taking a step in the right direction.